What Is Rideshare Insurance, and Do I Need It?

For car owners who want to become rideshare drivers, adding additional insurance to their policy can help ensure complete protection.

Elliot Rieth | 

Jul 12, 2024 | 3 min read

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Many car owners use their vehicles to drive for rideshare companies such as Uber or Lyft. Ridesharing can be a way to make money by transporting passengers between locations using a personal vehicle, but there could be insurance risks for drivers.

If you drive for a rideshare company, adding the proper insurance coverage can protect you from being held responsible for any damage to your vehicle that occurs before pickup or after drop-off.

Rideshare Insurance Is Designed to Protect You

Whether purchased as a separate policy or a rideshare endorsement on your personal policy, rideshare insurance is specialized car insurance designed to protect you, your vehicle, and your passengers while driving for a rideshare company.

Consider Whether You Need Rideshare Insurance?

If you are planning on using your personal vehicle to provide ridesharing services, rideshare insurance is something to consider. While the rideshare platform may offer some protection while you're on the job, their policy likely won't cover every scenario.

Insurance from the rideshare company, also known as transportation network company (TNC) insurance, typically only covers you after you've accepted a request or while you are actively driving a passenger. Your personal car insurance, on the other hand, likely won't cover you during any time you're actively working. To protect yourself during the time in between TNC or personal insurance coverage, you may consider signing up for rideshare insurance.

How Rideshare Insurance Works

The time that you use your vehicle for ridesharing is often broken up into three periods — in the eyes of your insurance providers.

• Period 1: During this time, you are waiting to be matched with a potential fare and are neither headed to a passenger nor have one actively in your vehicle.
• Period 2: This period begins once you accept a ride request and continues until you pick up your passenger.
• Period 3: This section covers the entirety of your passenger's ride, from pickup to drop-off.

During Period 1, while you're waiting to be matched with a passenger, TNC insurance may offer liability protection, depending on the insurance provider. However, you will still likely be responsible for any damage to your vehicle in the event of an accident. Your personal insurance likely will not cover you during this time since your personal provider will likely consider any in-between time as business.

During Period 2 and 3, your TNC insurance may protect you until your ride is complete. However, TNC insurance has higher deductibles than personal auto insurance. Rideshare insurance may over some of the gap between your costs and your TNC deductible.

Ridesharing insurance bridges the gap between the coverage times of your personal insurance and TNC insurance and can protect you from costly damages that may occur between rides.

Regardless of whether or not you sign up for rideshare insurance, informing your personal auto insurance provider of your activities can keep you from having your policy terminated or unrenewed in the event you get into an accident while on the clock.

If your vehicle is still being financed, you may also want to check your loan policy to ensure your lender allows you to use your car for ridesharing. Some may not.

Cost of Rideshare Insurance

Just as with any other car insurance, the cost of rideshare insurance will vary depending on your driving record, vehicle, and state. However, according to Lendingtree, a financial information site, rideshare insurance costs an average of $31 per month as an add-on to your personal policy.

Elliot Rieth

Elliot Rieth is a writer who was born and raised in Michigan, the center of the American automotive industry. With a background in the industry that spans from sales to digital marketing, Elliot has years of experience working directly with dealers and OEMs to create digital content and educate potential customers. When Elliot isn’t writing about horsepower or EVs, he can be found with his two greyhounds enjoying a new book or record.